Readers write on mortgage morality

Dear Beth, if you are familiar with the film Network in 1976 there is the classic line, "I'm mad as hell and I'm not going to take it anymore." I guess that is where I and many other hard-working Americans are just now. That is why they are walking away in droves from their mortgages and are voting out the establishment. — Leonard Feinberg

Judging by my inbox, Leonard, you're not the only one invoking Peter Finch's famous tirade. And that goes for both sides of the fence.

As a homeowner that is currently employing a strategic default, I take exception to your description of my decision as immoral. I chose to walk away in order to save myself financially from a bottomless pit. Should I risk my entire financial life, my family's financial life and my retirement on a single house? I don't believe that I did anything IMMORAL. I tried for a year to work things out with the bank, but THEY refused. They left me in a position to make a serious decision about my financial future. One that I didn't take lightly. One that will ruin my credit. One that I will be paying for years to come. I don't just get a free ride by walking away! — Lynn Thompson

Lynn, it's a shame so many people are finding themselves in this situation. I've talked with economists who question why more homeowners don't walk away for the very reasons you stated.

When I sign a contract, it is not just ink. I have given my word. Events can happen that make carrying out a contract and making good on your word impossible. Events that make it hard, uncomfortable, inconvenient and unprofitable are not reason enough to break your word. Just walking away from a binding contract should have a lasting effect on a person's ability to borrow again. — Bob Showalter

I'll continue to follow the story, Bob, on how this affects credit scores.

I live in a condo that will probably be underwater come the 2011 appraisal and I don't want a government bailout. What we need is for Washington to stop playing mommy and daddy, lower taxes and spending, then get out of the way and let a free market roar the economy back to life. — Steve Shenk

Well, Steve, considering the feds already spent billions of dollars on bailout programs, it's a little late for the free market.

Two years ago, when I thought that we had slid as far as we would see in house prices, my wife and I decided to purchase our first house. Unfortunately, we were about eight to 10 months too early and there was another dip in house prices that fall ... Someone needs to do something for the people who are making their payments. The government and banks are forcing bad situations to happen. I couldn't imagine going to a doctor with the flu and having them send me away because I didn't have pneumonia yet. — Mike Booth

Good analogy, Mike, for the conundrum many people encounter when they try to talk with their lender.

I am curious if you would care to address in your column how an "underwater" homeowner deserves any more consideration than the investor/retiree who got decimated in the crash of 2008? I can't generate a whole lot of empathy for the underwater homeowner who wants to walk away from their obligation — or expects the government to develop a plan to bail them out — when there has been absolutely nothing done to "bail out" the now near destitute retiree or investor who lost most of their funds in a similar manner. What's the difference? — Peter Satterlee

I hear you, Peter, but there are lots of differences between homes and the stock market. The big one being that most of us have only seen real-estate prices rise while the market is known to be a much riskier investment.

It is my understanding that "walking away" from one's mortgage is not that simple. Unlike a short sale or bankruptcy, I have read that banks will aggressively pursue money that is owed to them, particularly if the homeowner is solvent. — Bill Creedon

Stay tuned for a future column on this very topic, Bill. Banks can go after deficient borrowers in Florida, and while many lenders haven't wanted to spend the time or money to do so up until now, I expect they will if more strategic defaulters have the means to pay.